As India seeks to win back influence in Nepal, the two countries on Saturday agreed to boost connectivity and trade, as well as defense and security ties, during a visit by Nepalese Prime Minister K.P. Oli to New Delhi.

Oli, who is perceived to be close to China, made India his first stop after taking over as prime minister last month following a sweeping victory by his left alliance. The visit is seen as an effort by both sides to reset ties.

After talks between the leaders of the two nations, Indian Prime Minister Narendra Modi said New Delhi would upgrade key roads, develop a new rail link from Kathmandu to India, and develop inland waterways to provide sea connectivity to the landlocked Himalayan nation.

"India has a long history of partnering in Nepal's development," Modi said after holding talks with his Nepalese counterpart. "I have assured Prime Minister Oli that India will continue to be fully committed to Nepal's economic progress and its security."

Influence concerns

The visit came amid worries in New Delhi that its traditional dominance of Nepal will end with Oli at the helm. He is expected to continue his outreach to China, which began during his previous stint as prime minister from October 2015 to August 2016.

"We want to erect a strong edifice of trust-based relationship between the two close neighbors that we are," Oli said.

Acknowledging that Nepal has entered into a new era of economic development, he stressed the need for expanding bilateral trade that is heavily tilted in India's favor. "I shared with Prime Minister Modi Nepal's concern about our alarming scale of trade deficit and stressed the need of implementing measures to expand Nepal's exports."

The two leaders also inaugurated two projects. They pressed a button to symbolically open a border check post in Nepal that will facilitate trade and commerce, and they unveiled an initiative to build a 69-kilometer pipeline to transport petroleum from the Indian state of Bihar to Nepal.Once completed, it would deliver 200 million tons of petroleum products to the fuel-starved country, which currently is hauled by trucks from India.

Oil shortages

The pipeline is significant, and anger ran high in Nepal in 2016 after a road blockade led by an ethnic Nepalese community resulted in crippling oil shortages in the landlocked country. Blaming India for backing the protesters, Nepal turned to China for the first time to supply some oil.

Nepal is critically dependent for connectivity on India, which surrounds the country on three sides.

Oli, who is expected to try to balance ties between his giant neighbors, has stressed the importance of increasing links to China through infrastructure investments to diversify the landlocked nation's options.

In recent years, China has been increasing its investments in the strategic Himalayan country, a natural buffer separating India and China.

Kathmandu also has agreed to join Beijing's "One Belt, One Road" initiative that aims to enhance connectivity by building infrastructure projects between China and the rest of Asia. India has not joined the ambitious initiative.